Israeli private equity firm FIMI Opportunity Funds is set to acquire control of Israeli build to print manufacturer Ashot Ashkelon (TASE: ASHO) from defense electronics company Elbit Systems Ltd. (Nasdaq: ESLT; TASE:ESLT), at a company valuation of NIS 340 million, sources close to the matter have told "Globes." The price reflects a 20% premium on Ashot Ashkelon's share price.
Ashot Ashkelon makes parts for armored vehicles, heavy vehicles and aerospace including gears, gearboxes, transmissions, landing gear components, and engine shafts and rotating parts, and is traded on the Tel Aviv Stock Exchange at a company valuation of NIS 280 million. Elbit Systems holds 85% of the company's shares.
FIMI Opportunity Funds, led by founder and CEO Ishay Davidi, acquires and enhances industrial and service companies and controls companies in similar fields. FIMI declined to comment on the matter.
Elbit Systems gained control of Ashot Ashkelon three years ago when it acquired IMI Systems from the state for NIS 1.8 billion. In April 2020, Elbit Systems attempted to buy the remaining 15% in the company at a company valuation of NIS 283 million and delist it from the TASE. But the minority shareholders did not accept the offer.
Market sources believe that the offer failed because the shares are dispersed among so many small shareholders. As of July 2021 individual shareholders held 11% of the minority stake and institutional investors just 4%.
Elbit Systems, one of the largest companies traded on the TASE with a market cap of $6.55 billion, was eager to gain full control of Ashot Ashkelon so that it could merge the company into its overall operations. Without such synergistic savings Elbit Systems did not want to retain the company as anyway Ashot Ashkelon is struggling to grow. The company's aerospace activities have been hit by the Covid crisis.
Ashot Ashkelon's employees have not been enthusiastic about FIMI's pursuit of them with the private equity fund having a history of enhancing the performances of companies it acquires by streamlining the workforce.
Published by Globes, Israel business news - en.globes.co.il - on October 14, 2021
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